June 20, 2011 2:27 PM

Nuclear Showdown: Energy Companies Lawyer Up to Fight New Restrictions

Posted by Brian Baxter

Some of Germany's largest energy companies are calling in legal heavy hitters to resist the country's plan to phase out nuclear power by 2022, according to a report by German weekly news magazine Der Spiegel.

Last month, Germany's coalition government announced a plan to close all nuclear power plants in the country within ten years. The announcement comes amid a series of antinuclear protests in Germany that began in the wake of the Fukushima Daiichi disaster in Japan earlier this year.

The events in Japan prompted German chancellor Angela Merkel to establish an ethics panel aimed at reviewing the country's nuclear power industry. That review led to the closing of several aging plants indefinitely.

While many Germans support the move away from nuclear power, the country gets roughly one quarter of its electricity from nuclear sources and must therefore find ways to fill the shortfall should all reactors be shuttered.

The decision to abandon nuclear power could be disastrous for four of Germany's largest utilities like RWE, E.on, EnBW, and Vattenfall, according to Der Spiegel. Earlier this year some German energy giants began weighing the possibility of challenging any plan to make the temporary shutdown of certain reactors permanent.

Now some of those same companies have hired Magic Circle firms Clifford Chance, Linklaters, and Freshfields Bruckhaus Deringer to muster a legal challenge to the government's decision.

Der Spiegel reports that German firm Gleiss Lutz--an alliance partner of British firm Herbert Smith--has drawn up a document claiming that energy companies own the surplus power generated by the country's 17 nuclear power stations, and that they're protected by property laws under the German constitution. (Gleiss Lutz advised the German state of Baden-Württemberg last year on a $6.2 billion energy deal.)

Lawyers claim that the German government has failed to supply "stringent reasons" for its nuclear phase-out plan, which was drawn up over the past three months, and that the companies affected by the new legislation are planning on suing the government for billions of euros in damages.

If the German government were to lose such a suit, the burden for paying those damages would fall to the German taxpayer, Der Spiegel reports. The companies are also planning a challenge of the government's tax on nuclear fuel.

The German economy is Europe's largest.

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